SMP Report On Tapal Tea

Research Report on
Strategic Marketing & Planning
Tapal Tea Private Limited

Plot 40, Sector 15, Korangi Industrial Area, Karachi
Submitted To:
Sir Ekhlaque Ahmed
Submitted By:
Imran Ali – 8862
Muhammad Bilal – 8698
Arsalan Yousuf – 8677
Date: 17-04-2010
INSTITUTE OF BUSINESS MANAGEMENT Page 1

TESTIMONIAL
We bow towards, The Great Al- Mighty ALLAH for showing us, the strength and courage for
all the challenges through out our journey in exploring the wonders of this visionary and
dynamic subject of “Strategic Marketing Planning”. Indeed, we are grateful to our mentor Sir
Ekhlaque Ahmed, whose dedication, guidance and enthusiasm for the subject always
persuaded a challenge for us to become and prove that, how good we are business
managers. We had at most optimum, placed our sincere efforts and sheer hard work to
satisfy our mentor with this report. We would always like to remember and honor with
gratitude toward our family & friends, in supporting and motivating us during days, we felted
low and finally, the TAPAL people specially, Mr. Haroon Rashid whose endless support
glimpsed a ray of hope and success to this project. Thank You
Imran Ali
Muhammad Bilal
Arsalan Yousuf
Table of Contents
Executive Summary............................................................................................5
.......................................................................................................................... 6

Company’s Profile...............................................................................................6
History of Tapal............................................................................................... 6
Business Scope...................................................................................................7
Market Structure of Industry.............................................................................10
Market Share.................................................................................................... 11
Market Structure of the Company.....................................................................12
Market Size - Past four years – Qty (Tons)........................................................13
Market Size - Past four years – Value (in ‘000).................................................14
Market Size - Next four years – Volume (Tons).................................................17
Assumptions for Growth................................................................................18
Dust Tea Segment......................................................................................18
Leaf Tea Segment......................................................................................18
Mixture Tea Segment.................................................................................19
Green tea Segment....................................................................................19
Iced Tea Segment......................................................................................19
Product Life Cycle.............................................................................................19
Competition Growth matrix..............................................................................20
Threat of New Entrant...................................................................................22
Bargaining Power of Buyer............................................................................22
Bargaining Power of Suppliers.......................................................................22
Rivalry between Competitors.........................................................................22
Threats from Substitutes...............................................................................22
Environmental Factors...................................................................................23
Technological.............................................................................................23
Political.......................................................................................................23
Economic....................................................................................................23
Social and Cultural Forces.............................................................................24
Company and Competitor Analysis...................................................................24
Distribution Structure: Shift from 2008 To 2012...............................................26
Distribution Shares And Company’s Positions (2008).......................................27
Top 7 External Trends.......................................................................................28
Input:................................................................................................................ 28
SWOT Analysis..................................................................................................29
Strengths....................................................................................................... 29
Weaknesses...................................................................................................29
Opportunities.................................................................................................29
Threats.......................................................................................................... 29
Cross Matrix Analysis........................................................................................30
Value Chain Model............................................................................................31
Human Resource Management......................................................................31
Technology Development..............................................................................31
Procurement..................................................................................................32
Primary Activities.......................................................................................32
Inbound logistics............................................................................................32
Operations.....................................................................................................32
Outbound Logistics........................................................................................32
Relative Importance of Factors.........................................................................33
Input:................................................................................................................ 34
Rating Against Customer Buying Criteria..........................................................34

Impact of Issues on Strategic Profile.................................................................36
Customers Buying Criteria: Price...%, Quality Attributes...%............................37
Better................................................................................................................37
Availability........................................................................................................ 37
Taste................................................................................................................. 37
Same................................................................................................................ 37
Color.................................................................................................................37
Quality.............................................................................................................. 37
Worse...............................................................................................................37
Customer Complain Service..............................................................................37
Aroma...............................................................................................................37
10%..................................................................................................................37
20%..................................................................................................................37
30%..................................................................................................................37
Input:................................................................................................................ 38
Improve Aroma and customer complain services.............................................38
The Five Generic Competitive Strategies..........................................................38
Vision & Mission................................................................................................39
Business Objectives and Targets......................................................................40
In Short Term.................................................................................................41
In Long Term.................................................................................................42
Segmentation Variable of the Consumer Market..............................................42
Geographic....................................................................................................42
Climate..........................................................................................................43
Demographics...............................................................................................43
Psychographic...............................................................................................43
Behavioral .....................................................................................................43
Strategic Canvas - Past & Future......................................................................44
Input:................................................................................................................ 46
Selection of Supplier on the basis of price competitiveness can reduce the major
part of the production Cost...............................................................................46
Pricing Strategy................................................................................................47
Legging Indicators and Leading Indicators.......................................................47
Action Plan........................................................................................................49

Executive Summary
We the students of the College of Business Management were required to submit a report on
"Strategic Marketing & Planning”. There by we have full filled our requirement and have
listed our findings in the following pages. We were required to choose a company and
analyze all its activities in detail so we chose Tapal. Tapal had always ensured its landmark
in quality standards and because of this factor customer value and standards had proved its
ultimate goal of customer satisfaction. Today the market share of Tapal have reached the
top even in this economic crunch, but on to becoming a leader the company should provoke
to raise the bar on a continual basis and to address key success factors, only through
mitigating the key issues. In order to achieve the objective of this report we had to rely on
our own analytical skills as well the information we received from the major players in the
Industry i.e. mainly the three leading Tea manufacturers in the Industry as the likes of Tapal,
Unilever, Clover Pakistan and Eastern Tea. We even went further to compile consumer
views about different brands and the distributors opinions on the different brands available.
To full fill the extensive requirements of this report we broke each and every one of the
company’s activities in order to conduct and procure a more in-depth and more meaningful
analysis. For each activity analysis tools such as Internal Factor Evaluation Matrix, External
Factor Evaluation Matrix, In-Depth Activity Cost Analysis and Competitive Profile Matrix are
just some of the tools used in the following pages to bring a consistent and better analyzed
answer. We hope the following pages will be better able to answer and give thoughtful

insight into Tapal Tea, its competitors and the Industry in which it operates especially in the
light of Pakistan’s economy.
Company’s Profile
The journey of Tapal's remarkable success is the combined efforts of three generations.
Adam Ali Tapal was the founder of the Tapal Company. The saga of Tapal started with his
formulation of a unique tea blend, which was later named family mixture that led to the
Tapal brand becoming a hot favorite, and eventually the largest selling brand.
Taking a step forward from this humble foundation, Tapal moved up the ladder of success by
innovating and introducing different tea brands to suit every taste and pocket, which were
sold from its retail outlet in Karachi’s Jodia Bazaar.
People from all parts of the city flocked to the outlet to purchase Tapal tea, and soon, the
quality of Tapal teas became legendary. The company continued to thrive and grow under
the management of the founder’s son, Faizullah A. Tapal, who initiated tea distribution to
retail outlets around the city for the convenience of the people.
History of Tapal
The saga continued, and new horizons were explored by the founder’s grandson, Aftab Tapal
who gave a whole new meaning to the concept of tea and developed a wide range of tea
blends catering specifically to the tastes of people throughout Pakistan.
He introduced professional management and unique production ideas to the business. Being
one of the few professional tea tasters in the country, and a tea connoisseur himself, his
progressive outlook has given further strength to the foundation of quality laid by his family,
and has bought the Tapal company to newer and higher levels of success.

Evolving and innovating its way through its near-60 year history, Tapal is presently the
largest, 100% Pakistani owned tea company in the country.
Its has set new standards for modern tea blending and packaging factories, warehouses
equipped with state-of-the-art equipment and a team of highly dynamic professionals
headed by Aftab Tapal himself.
Business Scope
Pakistan Tea Industry 2009 Pakistan Tea Market Estimated 2009
Urban
33%
Branded Loose Tea
Tea Segment Rural
Segment 47%
53%
67%
In Pakistan, Tea is undoubtedly the national drink and it has more consumption than any
other type of drink available in the market today. It is estimated that Pakistanis consume
over 160 million kg of tea worth over 4.5 billion rupees every year. Despite the increasing
emphasis on its hazardous effects on health and the continuously rising prices, due to the
low literacy rate and unavailability of a better substitute, the demand and the consumption
has increased over the years and is growing at an annual rate over 3.5%.

As a consequence, Tapal desires a high level of customer satisfaction and unflinching brand
loyalty through commitment to quality and constant innovation. What deserves to be
mentioned is Tapal’s products are various with premium quality and have passed the ISO-
9001: 2000 quality system certification. A unique combination of high- grown Kenya tea
leaves and dust, that gives a refreshing aroma of leaf and strong taste of dust all together in
one cup. Tapal is a family name and calls attention to tea as an integral part of our lives
whether it is day or night or any time as a source of refreshments and revitalize.
Tapal has a diversified customer base ranging from urban to rural areas including various
institutions. People go with Tapal to get the Hence; Tapal’s target market mainly consists of
young adults and adults belonging to high, middle and lower income groups who are
primarily living individual and in family gathering.
Business Scope describes “The Business we are / want to be in” through the eyes of the
customers. It defines the areas of operation for the organization. It encompasses the
following questions:
• Specific Region
Regions = where?
Tapal Tea, the country’s largest National Tea Company, has manufacturing capability in the
country at its three plants located in which two are in Karachi and one in Raiwind. The
mother factory in Karachi only produces 65% of the total Tea categories like Danedar,
Mezban, Family Mixture, Shades of Green, Chenak, Tezdum and Ice Tea to fulfill its major
share contributing south market. The other manufacturing plant in Raiwind mainly produces
two categories i.e. Tezdum and Family Mixture.
The head office for the operations is based in the cities of Karachi and Lahore with
warehouses maintaining the organization’s presence in the cities of Hyderabad, Sukkur,
Multan and Islamabad.
To meet customer requirements everywhere, Tapal Tea further expands its network through
Utility Stores, Army Stores and Modern Trade Network country wide.
The only company owned shop located in Jodia Bazaar, Karachi to which it started his
business in 1947 as both whole seller and retailer. It’s Tea Blending and mixing center is
located in Karachi.

Tapal Tea has divided the country into two main and Six sub regions as;
South
Karachi
Hyderabad
Sukkur
North
Lahore
Multan
Islamabad
These Regions further classified into Zones/Territories and Towns to extensively cover the
market.
Tapal Tea is currently exporting to Asian counties of Afghanistan, Middle East, USA, Australia
and, other European continents which constitute around 1% – 2% of their total sales.
• Functions / applications
Functions / applications = what needs?
Tapal Tea is catering to the basic need of “Tea” accompanied with “Quality and
Affordability”.
Customer seeking needs would be:

Primary Attributes:
o Strong Taste
o Aroma
o Color
o Premium Quality
Secondary Attributes:
o Price
o Availability
• Customers
Whose needs?
“Rural and Urban” – They are catering to the needs of people living in Rural Areas of
Pakistan, as the main market for Tapal Tea happens to be the people from rural areas as its
68% of the total population of Pakistan. Besides, it is also catering to the need of people
from urban areas as they also constitute a significant percentage of their total market share.
• Added value
For Distributors:
o Competitive Margins
o Credit Facility
For Traders & Wholesalers:
o High margins

o Quantity Discounts
o Trade promotions and incentives
o Shop Branding + merchandising Rent
o Timely Oder Delivery
o Shelf Space Rent
• Considerations
Diversify the business in the complementary products.
• Boundaries and Future Scope

- Matching production with increasing demands in the future.
- Bringing new products (ranges) for new segments and untapped markets
- To broaden exports function in Middle East and other international markets; and
prove existence in international markets.
- To maintain the leading position in the local market.
- Modernizing operations and optimal capacity utilization.
- Restructuring strategies for the bottom of pyramid customer base.
- Customer oriented pricing strategy
- Tactical media strategy for each brand
- Strengthen the brands and communication to avoid internal cannibalization.
Input:
Tapal always seeks out different arenas to beat the competition while struggling to maintain
the existing share, plan trade driven promotions to strengthen the long term relationships.
To be an aggressive player in the market it is trying to exploring international markets
where it can not only penetrate, diversify and make long-term investment but also harvest
its current business.
Market Structure of Industry

Loose
Clover Eastern
Category Tapal Unilever /Mushroom
Pakistan Tea
Tea
Mezban
Surhan
Dust Pearl Dust
Dust Royal Dust Dust Available
Chenak Red Rose
Dawn Dust
Dust
Lipton Yellow
Danedar Tetley World
Label
Leaf Tezdum Tetley Vital Chai Available
LYL Teabags
DD-Teabags Teabags
Supreme
Family
Mixture - - Vital Chai Available
Mixture
Jasmine TBs
Elaichi TBs
Green Tea Clear Green TBs - - Available
Lemon TBs
Gulbahar
Tapal Ice
Lipton Iced Tea
Iced Tea tea (Can + - - -
(Powder + Can)
Powder)

Inputs:
Tapal is present in all the brand segments of Tea industry but there is a gap in the mixture
and Ice Tea segments so Tapal must develop strategic plans to enhance these two
categories.
Market Share
PakistanBrandedTeaMarket 2009
Eastern Tea Others

Clover
9% 4%
Pakistan
4%
Tapal
43%
Uniliver
40%
Quantitative findings
• Over all the branded Tea market has been greatly dominated by Tapal, stealing 43%
of the markets share, followed by Unilever 40%
• The other Tea manufacturers only hold 4% of the markets share which reflect that
how difficult is it to penetrate the market.
• It also highlights the fact that Tapal and Unilever market shares represent the major
chunk of the consumer base.
Input:
Tapal Tea must sustain the market share but explore new markets to avoid internal
cannibalizing amongst its existing brand.
Market Structure of the Company
Arm forces and

Masses Masses
Masses their families
End Users Bulk buyer Shoppers
Foreigner
Price sensitive Price sensitive
Consumers
Convenient buy
Product B2B Satisfy Tea
Contracted supply
Discounted B2C drinking needs
Applicatio Price Profit margin on
B2B
B2B
n Discounted Price
bulk buying B2C
Economy Packs
Mixture
Mixture Mixture
Leaf Leaf
Product Dust
Leaf Leaf
Dust Dust
Iced Tea
Vendor/contractor
Owner Finance Dept.
Govt. Officials Govt. Officials
Influencer Finance Dept.
Proprietor Administration Dept.
Finance Dept.
Consumer Family Monthly
Budget
Traders Contractual
Retailers Restaurants,
Procurement
Whole sellers Hotels/Cafes, Offices
Procurement Dept.
Purchaser Dept.
Restaurants supplies
Foreign
Hotels/Cafes Portion of
Distributions
Corporate Offices Traders/wholesalers
Banks Family Shoppers

Educational
Institutions
USC/CSD Distributors Modern Trades Armed forces &

[General Trade/Wholesale [MAKRO/METRO] Export Channel
Out Of Home]
The Manufacturer
Synopsis:
• In the Tea Industry, the key player in the distribution structure is “the Distributors”.
These distributors are basically hired by companies. These distributors are further
cover whole sellers and retailers, as they custodian of their respective areas defined
by the company.
• International Modern Trades are the next sales drivers in the FMCG industry but may
damage the distributor or attract the company direct distributions
USC/CSDs are also playing an important role in the market but its dependency on
Govt. grant would have a substantial impact on its operations.
• Armed forces is a niche segment but contributing a portion of the cake.
• Rate of Exchange due to Export market supports business.
Market Size - Past four years – Qty (Tons)

*All in Ton
Market Size - Past four years – Value (in ‘000)

2005-06 2006-07 2007-08 2008-09
Rural 100,395 103,771 107,397 111,175
Loose 57,564 59,729 61,155 62,462
3.8% 2.4% 2.1%
Branded 42,654 44,101 46,182 48,744
3.4% 4.7% 5.5%
Urban 47,245 48,833 50,540 52,317
Loose 12,748 12,956 13,186 13,456
1.6% 1.8% 2.0%
Branded 34,674 35,854 37,301 38,825
3.4% 4.0% 4.1%
Grand Total 147,640 152,604 157,936 163,492
Loose Total 70,312 72,485 74,300 76,332
Branded Total 77,328 80,119 83,636 87,160
*All in Ton
2005-06 2006-07 2007-08 2008-09

Sub Total 50,381 52,425 54,667 57,123
Dust Rural 34,007 35,387 36,900 38,558
Urban 16,374 17,038 17,767 18,565
Sub Total 80,476 83,051 85,796 88,541
Leaf Rural 54,321 56,059 57,912 59,765
Urban 26,155 26,991 27,884 28,776
Sub Total 16,532 16,716 16,851 17,021
Mixture Rural 11,159 11,283 11,374 11,489
Urban 5,373 5,433 5,477 5,532

Grand Total 147,640 152,604 157,936 163,492
Total Black
Rural 100,395 103,771 107,397 111,175
Tea
Urban 47,245 48,833 50,540 52,317
*All in Ton
Total Tea Market

120,000
100,000
80,000
60,000 Branded Tea

Loose Tea
40,000
20,000
0
Urban Rural Urban Rural Urban Rural Urban Rural
2005-06 2006-07 2007-08 2008-09
Synopsis:
• The overall Tea industry has been growing gradually both in terms of sales and
revenue.
• Branded Tea segment is showing healthy growth especially in rural markets where as
market is gradually saturating in urban area.
• In the Tea Industry, Dust and Leaf has a major chunk of the Tea industry in terms of
Black Tea. However the dust category is now become 2nd most demanding brand and
has been continuously increasing among the core tea users especially in rural areas
because of two major concerns as:
1. Per capita income has been increased which caused in increase of Tea
consumption with the growth in the population rate.
2. people are serving Tea as an economic point of view and with draw from the
serving of cold soft drinks to their guests as an expensive drink
3. Bottom of Pyramid market
• In Mixture category which was the legendry brand of the time and initially blended by
Tapal when first started its business in Pakistan is now either being matured or
cannibalized by other brand.
• Green Tea has developing bit-by-bit as the health awareness level gradually build in
the mind of the consumers. This segment is very niche as the consumption pattern
has restricted consumer with the diet planning, health issues and exposure to
particular social class.
• Iced Tea portfolio has yet to be waited for the acceptance from consumers as
the brand is premature for the industry and need few more years to be established.
Input:

Overall the industry has natural growth with respect to the Population growth rate.
Therefore, good pricing strategy related to bottom of pyramid market i.e. Rural Market could
capture more returns for the company as well as market share. However Green Tea and Ice
Tea needs to be milking to sustain their growth.
Market Size - Next four years – Volume (Tons)

Assumptions for Growth
Dust Tea Segment

Rural population is continues growing in Pakistan and hence the market size is increasing
proportionally as the total area expending and regular Tea consumption of the people has
also increased. Since the Dust category is the flagship brand of this market hence the
demand has been increasing at the average rate of 3.3% each year.
Leaf Tea Segment

There is a pilgrim shift in the economy of Pakistan which has stretched the middle class
upward as a consequence more and more consumer switch to this premium brand. In
Pakistan, the growth rate of Leaf is around 2.5% this year which is the highest growth in last
5 years. Teabags are the major revenue generators in the Leaf category in the local urban
and international markets providing high contribution margins to business.

Mixture Tea Segment
This category is reaching at its maturity stage but in last decades it was a primary brand of
the market. Also one of the major reasons of down this brand is low price gaps between the
category brands which stimulate the customers to switch on other brands
Green tea Segment

People have become health conscious today and would want to prefer green tea over the
traditional black tea but this category has a niche segment so would take time to build in
future. As the literacy rate is continue to increasing in Pakistan therefore more growth is
expected in this category.
Iced Tea Segment

Due to climatic conditions, where the weather of Pakistan is mostly hot; consumers would
prefer soft drinks over tea but due to low awareness level this segment would take couple of
years to build the market as the youth has been moving towards the healthy lifestyle and
trend lovers in urban areas.
Input:
Tapal must sustain its current position in the industry but strive to capture the share from
the competitors and Loose Tea market by offering good value for money to consumer at
every price point. Women are the key part of the overall Tea purchasing and making so
targeting this gender and rewarding would be effective for Tapal to grab the market share.
Product Life Cycle

Product Introductio
Growth Maturity Decline
Segment n
DUST ***
Mezban Dust +++
Pearl Dust/Redrose ++
Royal Dust +
LEAF ***
Danedar +TB +++
Tezdum ++
Supreme ++
LYL + TB +++
Vital Chai +
Tetley World +
MIXTURE ***
Family Mixture +++
Vital Chai ++
Tetley World + TB +
GREEN TEA ***
Shades of Green ++
Lipton Green Tea +
ICED TEA ***
Tapal Ice Tea Powder +
Lipton Iced Tea +
Nestea +
Competition Growth matrix

COMPETITION SEGMENT
DUST LEAF MIXTUR GREEN ICED OVERAL
E TEA TEA L

(in Ton)
Jasmine
Mezban
Danedar TB
Dust Family Tapal
Tapal Tea DD TBs Lemon TB 33,000
Chenak Mixture Ice Tea
Tezdum Elaichi TB
Dust
Gulbahar
LYL packs Clear
Pearl Dust Green Lipton
Unilever LYL TBs - 32,000
Red Rose (Mint + Iced Tea
Supreme Lemon)
Tetley
Tetley
Clover Pakistan Royal Dust World - - 3,000
World
Tetley TBs
Surhan
Eastern Tea Dust Vital Chai Vital Chai - - 4,000
Dawn Dust
Historical Growth 4% 3% 1% 4% 9% 3%
Projected Growth 3.4% 2.6% 1% 4.8% 22% 3%
Company
6% 7.5% 3% 10% 13% 6.6%
Profitability
Synopsis:
After analyzing the market for its capacity and its segmentation, we have come up with the
following findings:
• The Tea Industry is directly influenced by the changes in the economic factors and
stability
• Each segment has its own stimuli or functionality which affect the product demand
especially Dust segment is penetrating in the urban areas of upper Punjab and has a
greater influence on the other variants.
• The change in prices and margins has a direct impact on the sales of the segments
• Tea consumers in market greatly rely on strong brand name and reputation created
over the years.
• Iced Tea segment is still premature concept in Pakistan but the trend would be more
favorable in future for this category.
• Each company has a set target market in which it capitalizes but now they are doing
guerilla warfare strategies to capture more share in the market.
• Mixture category must clarify its positioning to sustain in the market.
Input:
• Growth in Dust, Leaf and Green Tea Segments
• Mixture is facing challenges as of being approaching maturity so preemptive action

would be taken to avoid lose of positioning and cannibalizing.
• Green Tea has a huge potential of longevity but more variants to be launched in
order to sustain growth
• More and continuous investment would required to develop the Ice Tea market and
opportunity to launch new variants
• Low cost leadership would improve the pricing strategy

Porters Five Forces Model
Threat of New Entrant
Ever rising number of Mushroom Tea products is new entrant in the Pakistani Tea industry
and are threat for the other three key players in the market namely:
• Tapal Tea Private Limited

• Unilever Lever Pakistan Limited
• Eastern Tea Private Limited
• Tetley Clover Pakistan Limited
Pakistan is truly a rare land, home to different civilizations and diverse cultures. The industry
is dominated mainly by four companies, Tapal, Unilever, Eastern Tea and Clover Pakistan in
this very order. As we have already discussed, Unilever capitalizes on its strong hold as the
Multinational Giant in the FMCG market due to its multiple product lines in the segments and
their low prices. Tapal Tea on the other hand does directly compete with Unilever at the Tea
base since it has only Tea manufacturer. The main competitors of these companies are
Loose Tea (smuggled) markets i.e. Mushroom Brands, which has been successfully operating
in the rural markets especially on price packs. We have discovered that the consumer is not
ready and willing to pay price for a cup of Tea that is only affordable. Tapal Tea needs to
come up with a differentiation strategy to put up a fight with Loose Tea which is projecting a
low priced. Tapal Tea needs to bring down its price in order to make the consumers shift
from Loose Tea or other branded Tea without compromising quality.
Bargaining Power of Buyer

In case of Tapal the bargaining power of Buyer is low because the there are so many
distributors in Pakistan and Tapal has a wide range of options to choose.
Bargaining Power of Suppliers

In case of Tapal, Supplier’s bargaining power is high because there are many distributors
available but the market has limited number of suppliers.
Rivalry between Competitors

There is an intense rivalry among the competitors, as the market has a lot potential, which
can be observed by the entry of two new competitors in the tea market in the last five years
i.e. Clover Pakistan & Eastern. However, the main competition and rivalry is among Unilever
& Tapal. Both are always trying to capture each other’s market share and in the recent
retaliation strategies from Tapal have been fruitful.
Threats from Substitutes

Coffee is a substitute for tea as both fulfilling the core need of refreshment. In the category
of coffee Nescafe has a lion’s share and it is an indirect threat of substitute for Tapal
because in the winter season people usually prefer coffee over tea.

Environmental Factors
Technological
Technology is also harnessed at Tapal to benefit the consumer. Tapal was the pioneer in soft
packaging and round tea bag. They imported this innovative technology and established a
fully automatic facility under the guidance of their founder, Adam Tapal, where soft packs
were produced for the first time in Pakistan. Few years back Tapal has improved the
technology to hard packaging. At this facility tea is blended and packed in hygienic
conditions, untouched by human hands whilst the hard packing technology keeps tea fresh
and packaging costs economical. The success of these hard packs has been such that other
tea companies have also followed Tapal's lead and launched some of their brands in hard
packaging.
Political
The political & legal forces that affect Tapal are the taxes & excise duties levied on Tapal’s
products and its imports. Also it has to fulfill all the rules and regulations as per law.
Fluctuation in the import duties by federal government is an issue of great concern for all
tea-marketing companies. If we look back in past, tea imports during 2004-05 increased by
over 10 percent compared to 2003-04 mainly due to a cut in the import duty, the federal
government in the budget 2004-05 cut by 50 percent the import duty on tea, bringing it
down from 20 percent to 10 percent to what it said protect the local industry and curb the
menace of smuggling. This decline resulted in more production and Tapal discovered a new
market for herself and started exporting its blend tea. Right now Tapal is exporting tea to
some of the countries abroad like Canada, Saudi Arabia, and Dubai. Illegal imports are
substantial, nearly 1/3 of domestic consumption and an 81 million USD business. Tea
smuggling is a matter of great concern. The government loses huge money in import duties
and domestic importers face tough competition from those who are instrumental in bringing
back tea meant for Afghanistan. Most is Indian low-grade bulk tea transported through
Afghanistan and sold bulk in markets in the towns near the Western border.
The trade is growing, 48,000,000 kgs, were brought illegally into the country during FY06
and 40,000,000 kgs, in FY05, a 10 percent increase. Legal imports declined 12.5 percent in
the same period.
Economic
Another major factor that affects Tapal’s marketing strategy is the conditions prevalent in
the economy. The main economic forces affecting the market are:
Stage of Business Life Cycle
Whether the economy is in a recession or in a boom, it affects the activities of Tapal in a way
that it influences the demand of their product. In a boom the demand of the product
increases. Similarly, in a recession the demand of a product falls since the buyers consume
less of the product due to falling incomes. Though fluctuations in the demand do occur,
these are not major fluctuations as demand for tea is inelastic in relation to price.
Inflation
Inflation plays a major role on the marketing strategies used by a company due to
two main reasons. Firstly, inflation affects the consumers’ psychology and they
become more selective in their purchases. Secondly, inflation results in rising prices
for the raw materials purchased by Tapal, which in turn increases the cost of
production. This factor plays a major role especially if the increase in cost cannot be
transferred to the consumers in the form of raised prices.

Social and Cultural Forces
Society and culture plays an important role in determining the marketing plan of Tapal.
Consumer adoption of a product depends greatly on the target markets beliefs, tastes and
values of the people. For instance, Mezban tea was developed as a stronger tea keeping in
mind the taste of the consumers of interior Sind
Company and Competitor Analysis

Making a modest beginning over half a century back, today Tapal has become the largest,
100% Pakistani owned Tea Company in the country. It has modern tea blending and
packaging factories, warehouses equipped with state-of-the-art equipment and a team of
highly dynamic professionals headed by Aftab Tapal himself. He was the first to introduce
soft packs in the country. He developed an entirely new brand and category- Tapal’s Family
Mixture (the mixture of tea & dust). Mr. Aftab Tapal was the first to invent the highly
successful brand Danedar Leaf Blend. In December 1997, Tapal Tea became the first
Pakistani Tea Company to earn the ISO-9001 certification: a symbol of the highest
international quality standards. Again in December 2000, Tapal acquired the ISO-9001: 2000
certification, making it one of the first few companies in the world to achieve this milestone.
In addition to the standard requirements, the ISO-9001: 2000 certification system includes
requirements for environment improvement, concepts of TQM (continuous improvement)
with major emphasis on consumer requirements and satisfaction.
Tapal’s success has left many astounded. No magic formula however, lies behind its growth
other than hard work, dedication and of course unique blends and better quality.
Competition in an industry is of four kinds

• Product form competition
• Product category competition
• Generic competition
• Budget competition
In the case of Tapal we would be considering the following competition that is:
Product Form Competition

In case of Tapal product form competitions are:
• Brokebond Supreme
• Tetley tea
• Lipton tea
• Vital Chai
• Surhan Dust
• Mushroom Tea
Product Category Competition

In case of Tapal product category competition would be:
• Danedar Kenya BP
• Mix Patti
• Super PFI
• Brazil Green Tea
• Bangladesh Green Tea
• Lemon Grass

• BPI (Indonesia)
• Kenya Mix Tea
• Kenya Dust
• F-1 Kenya
• Green Tea (Indonesia)
Generic Competition
In case of Tapal the Generic competition comprises of:
• Nestle Instant Coffee
• Nescafe Coffee
• Mineral Water
• Cola
• Cadbury Coffee
• Lipton Ice Tea
• Juices and soft drinks
Budget Competition
Incase of Tapal the Budget Competition is:
• Restaurants
• Hotels
• Offices
• Educational institutions
• International Modern Trades
• Cafes
• Airlines
• Arm forces
• USC/CSDs

Distribution Structure: Shift from 2008 To 2012
%
Tea Market
2008 2012
DISTRIBUTOR 65 50
MODERN TRADES 7 20
USC/CSD 10 7
OOH 18 23
100 % 100%
Synopsis:
• Distributors will divert themselves towards the large retail stores as the margins are
continuously cutting off so the Tapal Tea outlets coverage would be tougher than
before.
• Introduction of the Modern Trades in Pakistan would influence the distribution and
other local government subsidiary chains as of more convenience factors and volume
share by offering memberships and freight cutoffs.
• Tapal has been improving the OOH structure to capture the opportunity in the future.
• Utility Stores has dependency upon the Government subsidy if the policy changes
they could be having great impact on the market.
Input:
Tapal should reduce the cost of operation and logistics to not only retain its current
distributions network but also minimize the margin gaps amongst the sales sources.

Distribution Shares And Company’s Positions
(2008)
ALL #1
COMPANY’S
PAKISTAN COMPETITOR’S OUTLET
% TURNOVER
DISTRIBUTIO TURNOVER COVERAGE
SHARE
N SHARE
DISTRIBUTOR
60 70 60 65
(GT/WS)
MODERN
7 10 15 90
TRADES
USC/CSD 18 15 15 75
OOH 5 5 10 25
o The only change in the last 4 years is the introduction of IMT (International Modern
Trade) with their regional placement and presence at key transaction centers.
o The distribution structure of Tapal Tea and Unilever is comprised mainly of
“distributors”. The total number Tapal’s exclusive distributors are approx 435
distributors covering 114,000 outlets across Pakistan. However, Tea is also being
channeled through various other channels in order to reach to end consumers.
o Distributors are the institution through which availability of products is possible
across the retail trade. Tapal’s exclusive distributors have a very good relationship
with them. The important thing is that they must integrate into total marketing mix
because of time and money required to setup an efficient channel.
o Whole sellers are very dynamic in their demand as they try to find the better option
and direct reach the Modern Trade channels.
o The company’s turnover share through, distributor & direct is 70%, & 30%
respectively.
o The outlet coverage is almost 85-95% in South but 65% in North.
Where,
o GT= General Trade (general stores, Kiryana stores, Medical and General stores)
o IMT= International Modern Trade (departmental stores/Hyper Market such as
Makro)
o Whole seller- is route to direct to the rural areas and offered quantity discounts
o USC=Utility Stores corporation – Govt. subsidized shops
o CSD=Canteen Stores Department – Cantonment subsidized shops
Input:
Further expansion in the distributions to increase coverage and reach more consumers and
market share.
• Heavy investment in the marketing promotions in OOH sector can build strong and
long-term relationships with the corporate businesses and other complementary goods
manufacturers.

Top 7 External Trends
Taking advantage
Trend Potential Impact We C1 C2 C3

Growth of rural markets of
Increasing competition, price
Sind and Punjab; focus of Yes Yes Yes Yes
erosion, market share
companies on this area
Manufacturing Cost
Cutoff Profit and margin No No No Yes
Increase
Teabag Growth Opportunity, high profits Yes Yes No No
Influence on sales and
Digital communication Yes Yes Yes No
marketing Promotions
Population growth Market share increases Yes Yes Yes Yes
Healthy Lifestyle and More demand of Green Tea as
Yes Yes No Yes
awareness an Health benefit indicator
Customer/Trade Credit Low ROI, budget constraint ,
No No Yes Yes
Policy More receivables
Synopsis:
• Since the industry is on the growth as population expansion in Pakistan especially in

rural areas so the arrival of new entrants has major impact on the industry.
• Tea prices in international market are randomly increasing in a fiscal year which
caused cuts n profitability in major brands.
• Since the SEC classes have been stretching towards the upper middle level therefore
the demand of the premium product has increased as well as price products in lower
middle.
• This industry is still following the conventional rules of communication therefore no

company yet entered in this strategy.
• Tea has become a national drink of Pakistan and has more preference over other
beverages especially in rural market which is contributing 66% of the total population
of the country. As a consequence, the market size is continuously increasing so far
caused more consumption of tea.
Input:
Focus on the cost reduction, managing healthy brands, compelling brand communication
and product innovation.

SWOT Analysis
Strengths
1. Company name image –1st National Tea Company
2. Highly experience Sales staff + exclusive sole distribution network
3. Efficient production capacity
4. Expertise – Tea Blending.
5. Economical pricing strategy
6. Short term credit policy i.e. efficient ROI
Weaknesses
1. No customer complain center within the company.
2. Limited budget and investment in the business
3. Weak coverage in upper northern areas of Pakistan
4. high Price gaps between product line
5. Single product manufacturing company i.e. just Tea
6. No specified R&D department
Opportunities
1. Growing rural market and export

2. Initiatives in price pack category as to capture value from price sensitive customers
3. Newer segments introduced with entry of new brands which still have huge potential
for growth
4. Central and upper Punjab has tremendous potential for growth and profitability
5. Competition is still weak in south coastal areas
6. Tea prices are become high in gray/loose tea market
7. Green Tea market is growing because of health awareness programs
Threats
1. Abolishment of Subsidy given by Govt. on Tea Import
2. WTO (World trade Order) opening local markets for global competition.
3. Competitors launching newer brands with high margins at reduced price for our
price-sensitive economy proving serious threat in near future
4. Increase counterfeit and IP issues
5. Attraction for new entrants in the industry
6. Complementary goods are going more and more expensive then before i.e. Milk,
Sugar etc.

Cross Matrix Analysis
Opportunities Threats
1. Growing rural market and 1. Abolishment of Subsidy

export given by Govt. on Tea
2. Initiatives in price pack Import
category as to capture 2. WTO (World trade Order)
value from price opening local markets for
sensitive customers global competition.
3. Newer segments 3. Competitors launching
introduced with entry of newer brands with high
new brands which still margins at reduced price for
have huge potential for our price-sensitive economy
growth proving serious threat in
4. Central and upper Punjab near future
has tremendous potential 4. Increase counterfeit and IP
for growth and issues
profitability 5. Attraction for new entrants
5. Competition is still weak in the industry
in south coastal areas 6. Complementary goods are
6. Tea prices are become going more and more
high in gray/loose tea expensive then before i.e.
market Milk, Sugar etc.
7. Green Tea market is
growing because of
health awareness level
Strengths O1,2, 4 & 5: S2, 3, 4 &5 T1,2:S1,5 & 6
High Potential Ability to resist

1. Company name
st
image –1 National Tea
O6:S1&5 T2,3 & 5: S1,3,4 & 5
Company with
recognized brands
Increase Market Share Ability to resist
2. Highly experience
Sales staff + exclusive O7:S4
sole distribution network
3. Efficient production Segment Growth
capacity
4. Expertise – Tea
Blending.
5. Economical pricing
strategy
6. Short term credit
policy i.e. efficient ROI
Weaknesses
O4:W3 T6:W5
1. No customer
complain center within Hire new distributors High Risk
the company.
2. Limited budget and O2:W4 T5:W3
investment in the
business More customer switching Market Saturation
3. Weak coverage in
upper northern areas of T3:W2
Pakistan
Price wars
4. High Price gaps

between product line
5. Single product
manufacturing company
i.e. just Tea
6. No specified R&D
department.
Value Chain Model

Human Resource Management
Tapal's management philosophy is based on the traditional values of the Tapal family;
values that were based on good business sense such as establishing a tea-shop in the
business area of Jodia Bazaar. This mix of tradition and innovation has become the hallmark
of the winning Tapal strategy.
The company is managed by a dedicated team of highly qualified and experienced

professionals with diverse experience. Some of the key features of the management
philosophy are:
• Accessibility-Open Door Policy

• On-Going Training & Development
• Discipline & Respect at every level
• Participative Management Style
• Performance Appraisal System
• Excellent Employee Compensation
Technology Development
Tapal is always striving to install the most innovative technology in their firm. In the
production, Tapal has Hesser & Sohrab machines require less human requirement and
whole work is automated only the finished product are packed in cartons by the workers.
Although Tapal can automate this process too but in this case workers working their might
loose their jobs.
To record the attendance of employee and to enforce the punctuality there’s a machine on
the entrance of the factory where every employee has to put his/her finger and enter ID card
number and their arrival time will be recorded. Human Resource department has software
through which they maintain the leaves encashment record along with full information about
every employee is maintained. If an employee wants a leave on so and so date he/she must
access the server and send an email to the HR executive and the confirmation will be
delivered to the employee.
The software we really impressed with is the Oracle software used in the sales department
to dispatch orders to distributors. In this oracle software they have record of every
distributor and its zone, town, territory. We search the customer name and then book new
order. In the new order-booking format there is a table, which is divided in to following
columns:
In this process they call the number of stock requested by distributors in the column of
quantity reserved. If the stock is not available an alert message will prompt on the screen
and then the sales executive on his own discretion allocate the items to distributors. This

system is centralized by the warehouse database so you get the updated information about
the stocks.
Procurement
The procurement of tea is dealt by Tea and Blend department. The purchase of tea takes
place in two ways: on an auction and on a private offer basis. In a private offer the tea
gardens send samples to different tea industries. There are no bids and no auctions. The
same procedure is carried out in checking the tea samples. However in a private offer the
purchase is made on the SAS basis i.e. subject of approval of sample. If the sample is
approved by the tea tester then the purchase is made. Incase of a rejected sample a
replacement is made of another kind of tea.
In both cases that are the auction and private buying, after the purchase is made a
purchased sample is sent which is again checked to confirm the authenticity of the tea and
when the tea batch that actually comes in after shipment is also tested to confirm it is the
same tea without anything wrong in it.
Primary Activities
Inbound logistics
The raw material for tea is provided mostly by Kenya. The Tea and Blend department
initiates the whole process, be in touch with the suppliers in Kenya. The purchase of tea
takes place in two ways. On a auction and on a private offer basis. In an auction what
happens is that all major tea producing and exporting countries send catalogues and
samples of tea to major tea industries around the world. These samples are tested on
various aspects of taste, color, aroma and many other aspects. The samples that are
approved by the tea testing people are bought in the auction. The auction takes place every
week in a major city of the tea exporting country e.g. in Kenya it takes place in Mombassa,
in Srilanka it takes place in Colombo. Tapal has representatives in all these major tea
exporting countries who buy tea in the auction on behalf of Tapal.
Operations
The testing procedure is as such that the samples are displayed first. In front of the samples
is a cup which has that specific tea in it. All teas are brewed in the same manner with the
same amount of contents for the best result. Tea tasting team tastes all the tea and comes
to a joint conclusion. The tea which is selected is then bought in an auction or a private
offer. There is obviously a lot of samples coming in every week and lot of purchases being
made. Thus to keep a record of all such purchases and samples Tapal has prepared a
software called the Raw Tea Inventory. This software keeps record of all purchases, samples,
tea gardens, country and the person selling tea. We were astonished to know that the tea
department tastes about 500 cups a day.
Outbound Logistics
The outbound logistics in the south region is provided by the Al Mohammadi Enterprises, a
renowned and old customer of Tapal.

Relative Importance of Factors
Absolute Very Quite Not Don’t

Nice to
ly Importa Importa signific Want
Factor Number Have
Critical nt nt ant it
2
5 4 3 1 0
Price
Yes
Competitiveness
Product Innovation Yes
Product Quality Yes
Financial
Yes
Performance
Market Share Yes
Availability of stocks
Yes
and Outlet Coverage
Customer
Yes
service/support
Marketing
Yes
Communication
Manufacturing Cost Yes
Suggested Definitions:
Absolutely Crucial: Overrides most other considerations, wouldn’t consider supplier

who doesn’t perform on this factor.
Very Important: One of the first things we ask for, but we may be prepared to negotiate
on it.
Quite Important: A negotiable item, but one when we attach considerable weight to.
Nice to Have: It could make the difference in a division, but is normally taken into
account last.
Not Significant: Not normally taken into account at all.
Don’t want it: Would prefer a product without this feature
Synopsis:
• The key issues identified were the Manufacturing Cost, Price and Quality. We are
already aware that the Tea prices are touching sky high and consumers are
becoming very price sensitive in purchasing Tea for either further selling or personal

consumption. Tapal is already working on horizontal integration, improve the
technology, cost minimizing and optimal production capacity utilization.
• Another key factor is the market share which can be achieved through extensive
coverage.
• The booking time and delivery is a major cause and concern of the customer which
may shift the customer to other brands. The current delivery period of Tapal is every
alternate day when booked an order which is a great concern of product availability.
• The customer service is not a key requirement for the company as it has controlled
by the field force. Since Tapal has a diverse network of distributors the general
consumer base does not go too deep down into the complain requirements.
Input:
Price is the heart of all factors for the consumer to choose any brand. However, good quality,
packaging and performance also play as a catalyst for purchasing decision.
Rating Against Customer Buying Criteria
This
QUALITY & PRICE Busines Comp A Comp B
s
Non Price
Attributes affecting WEIGHTAGE
Customer Choice %
PRODUCT RELATED 80%
1. Quality 30 9 9 6
2. Color 10 8 8 6
3.Aroma 20 7 9 5
4.Brand Image 10 8 8 5
5.Taste 10 9 9 8
SERVICE RELATED 20%
1.Customer Complain Service 10 4 8 3
2.Availability 10 8 8 2
TOTAL 100% 53 59 35
Has quality gone up/down
Up Same Down
(+/-)In past 4 years
460- 490- 400-
Relative Price today (Rs.)
499/Kg 550/Kg 470/Kg
260- 280- 240-
Relative Price 4 years ago
370/kg 385/Kg 370/Kg
Rating Scale: 1 – 10
1 = Very Weak 10 = Very Strong
This
Comp
QUALITY & PRICE Busines
A
Comp B
s
Non Price

Attributes affecting WEIGHTAGE
Customer Choice %
PRODUCT RELATED 80% 6.6 7 4.7
1. Quality 30 2.7 2.7 1.8
2. Color 10 0.8 0.8 0.6
3.Aroma 20 1.4 1.8 1
4.Brand Image 10 0.8 0.8 0.5
5.Taste 10 0.9 0.9 0.8
SERVICE RELATED 20% 1.2 1.6 0.5
1.Customer Complain Service 10 0.4 0.8 0.3
2.Availability 10 0.8 0.8 0.2
TOTAL 100% 7.8 8.6 5.2
Inference:
After analyzing the customer preference and buying requirement we can safely conclude
that:
• The product constitutes 80% of the customer requirement i.e. customer is more
concerned about the non-price factors which include the brand Image, Quality,
Aroma, Taste and Color.
• Tapal plays a good role in quality attribute and have brands to satisfy varied
consumer needs.
• In the Service criteria the customers is more interested in the availability and
complain service. Tapal is weaken in customer complain area where the Unilever has
a separate unit for that so if Tapal covers up this area then surely would have an
edge over the rivals.
• The main issue which needs to discuss is rapidly increasing product’s price that has
already increased over 100% in last four years.
Input:
Improve the Aroma, quality and customer complaint services to break the clutter.

Impact of Issues on Strategic Profile
Consum
Compa
Product er High
ny $
Issue Name Innovati Purchasi Manufactur
Credit Price
on ng ing Cost
Policy
Power
Customers +++ ++ +++ +
Market segments ++ + ++ +++ +
Products/Services ++ +++ +++ +++
Strategic Management +++ ++ +++ +++ +++
Operations
+ ++ +++
(Production/Logistics)
Technology +++ +++ +++
Distribution Channels +++ ++
Raw Materials, Energy + +++ +++
Organization Structure +++ +

+++ Critical ++ Very High Impact + High Impact
Synopsis:
Analyzing each issue we conclude that the company must focus on critical issues and
regenerate their operating strategies according to the changing purchasing power of the
customer.
Input:
• Continues improving operation planning and optimize production cost at minimum

level.

• Remove credit policy to improve ROI and hire self sufficient distributors who can
easily invest.
• Low cost strategy would pass maximum benefits to consumers that improve their
purchasing power
• Proper forecasting of demand and inventory management can reduce the impact of
uncertain $ price
• Strong relations with supplier can reduce the $ price
• Value innovation would give competitive edge over rivals
Customers Buying Criteria: Price...%, Quality

Attributes...%
Questio
Keep it
n its
up
Cost
Relative Performance
Better Availability Taste
Color
Rating
Same Packaging Quality
Customer
Worse Complain Aroma
Service
10% 20% 30%
Impro
ve
Fast

Do not
Sweat
Attributes Important to
Customer
Input:
Improve Aroma and customer complain services
• Improve the quality to beat competition

• Expand coverage to provide convenience to consumers
• Build strong brand image through attractive packaging and win top of the
mind of the consumer
The Five Generic Competitive Strategies

Type of Advantage Sought
Lower Cost Differentiation
Chenak Dust
Broad Tezdum 22gm
Mezban Sachet
Range of Gulbahar
Family Mixture
SOG Selection Pack
Buyers Danedar Twin Pack
Mezban Dust
125gm
Narrow
Buyer
INSTITUTE OF BUSINESS MANAGEMENT
Tapal Special Teabag Page 38
Danedar Round
Segment Tapal Ice Tea
Teabag
or Niche
Inference:
Overall Low Cost Provider Strategy
This category comprises of Tea brands falling in the Dust and Mixture segments. These
segments have been dominated in Karachi, interior Sindh, coastal and thar belt by Tapal’s
Family Mixture, Mezban Sachet/Packs, Chenak dust and Denedar Twin Packs. The Tea
manufacturers compete with each other on the grounds of price and economy packs.
Broad Differentiation Strategy
This area has been competing on differentiation strategy with many customers choosing on
the basis of getting less for more. Tezdum competes in this segment on the grounds of
22gm and better brand image and Strong Taste. Gulbahar is the only choice for making
traditional Kashmiri Chai for consumers which has differentiation USP. SOG selection pack
offers all three Tapal famous Green Tea flavors i.e. Lemon, Jasmine and Elaichi to consumers
who seek multi offers on brands.
Focused Differentiation Strategy
This strategy has been only adopted by Tapal on Danedar Round Teabag which competes in
the high end segment of Lipton Teabags.
Best Cost Provider Strategy
The sole runner in this category is the Mezban Dust 125gm which provides value for money
that has proved its success in the product line in the sindhi cultural lifestyle.
Input:
Less for more, distinctive brands with sustainably growth and value to appeal larger buyer
Vision & Mission
The management and the employees of Tapal Tea (Private) Limited is committed to:
• Satisfy stakeholders and be a benchmark for Quality, Creativity and Ethical values in
business
• Achieve leadership in all the categories of core business and diversify in areas which
compliment the core business.
• Provide products and services that meet customers’ requirements, expectation and
agreements relating to all aspects of Tapal Integrated Management System.

• Define and update measurable objectives and continually improve the effectiveness
and performance of the Quality, Health, Safety, Environment, food Safety and IS
Management system.
• Prevention of injury and ill health by continuously identifying hazards and reducing
risks to people, facility and business.
• Ensuring that the Tapal processes and products are environment friendly and do not
contribute to polluting the environments in any manner.
• Adhere to all applicable legal, statutory and other requirements that relate to Tapal
products, services, health and safety.
• Establish effective arrangements for communicating with all stakeholders throughout

the food supply chain regarding all applicable aspects of Tapal Integrated
Management System.
Strategic Vision
To be a benchmark of Quality, Creativity and Value Innovation, achieve leadership in the
beverage manufacturing industry which compliment the core business
Strategic Intent
Making Tapal the premium choice of consumers not only in hot beverage segment but also
in other correlated segments.
Competitive Innovation
• Bring down the cost through horizontal and vertical business partners; optimize the
production capacity to meet the future demand
• Apply six sigma in complete business processes in order to attain cost leadership
Business Objectives and Targets
1. To maintain market leading position and increase the sales in North Region by 5% in
2010.
2. To strengthen the regional brands by brand building strategy
3. Seek out the areas where new products can be introduce to diversify the core
business
4. Investing to increase production capacity, in order to meet expected demand in
coming 5 years.
5. To increase localization by the end of 2011 in order to maintain and improve cost
effectiveness.

6. To optimize the introduction of new products by developing products with
new designs and features for youngsters segment.
7. To broaden export functions and prove and maintain product existence in
International markets.
8. Modernize the company’s operations by acquiring greater technical expertise.
9. Increasing field force and distribution network.
How?
In Short Term
• Through strategic partnership between vendors/suppliers delivering Raw Tea,
packaging materials, and machinery required to improve the efficiency of production
assembly and simultaneously through lead time management techniques such as
maximizing stock delivery turnover.
• Through continuously train and development of the front line workers and
supervisors to ensure to meet the deadline and productivity.
• Implication of Total Quality Management Techniques such as constant checks in

through every stage of assembly line and final test passes through the professional
test inspectors, generally meeting the prescribed requirement standard set
preferably by ISO- 9000 or other quality standard maintaining bodies. The philosophy
of doing it right the first time would be achieved through this method.
• This can be achieved through effective production processes and a strong link
between the Logistics and distribution spread in the market. An integrated system to
be devised where by the vendor/supplier and distributor would log in the details of
the ordered product on the computer screen and the same would be available to the
company plant office. The plant office will start production; each level of completion
can be monitored through the intelligent system. This would ensure that the delivery
process bottle necks are reduced and also an MIS can be generated to observe the
delays, reasons and even the frequency of orders and preference. Subsequently a
separate “SOP’s – Standard Operation Procedures” to be devised which would
contain the details and timing of production at different stages of production
• Seek out for avenues such as Tea could be manufactured cheaply on the local
grounds rather than depending on dollar price. The following measure would help
slash the manufacturing cost on two key risks, devaluation of local currency and
unrealistic demand.
• Through organizing events such as road shows, attack plans, events organizing or
more consumer engagement programs to be carried out through brand building and
promotional activities to appreciate the brand hard core loyal.
• Integrated Complaint Management System with 24 hours Call Center facility for Tapal
Customers facing any complain to active resolving trouble like counterfeit, fake
activities etc.
• Regular audit Schedule of surprise inspection team to test the measures, service and
standards set up at Tapal exclusive distributions centers.

• Constant Social Contribution and Environmental Reporting at Factory Site for the
residents and workers health and safety and following and obtaining the Ethical
Modules requires by the authorities
(The above objectives pertain to the day to day business activity and need to be
addresses on real time basis. Any delay or slackness in the above would lead to
business losses in terms of revenue and repute)
In Long Term
• Achieve further capitalization and investment outlay production of more profitable
segment and divest non profitable business units. This will benefit the Tapal Tea by
milking to more demanding segments and production. Simultaneously Tapal will have
to work out a strategy to reduce the prices of its above price products as they have
major share but also focus on the economy packs as volume drivers by consistent in
their supply, while entering into a new untapped markets.
• The positioning of the each segment would be such that it would compete with the
Unilever and Eastern Tea but would create an impression of better quality and value
innovation without facing the internal canalization. We expect that the customer can
be drawn towards each segment even if there were price war.
• A structured Resource program to be devised emphasizing on intellectual and

technical skills that can be made available in obtaining technology of specialized in
manufacturing. This entity would achieve two factors, firstly reducing considerable
production cost and secondly exposing the company to an additional market which
can be supplied with desired profit margins.
• With the added stress towards environmental protection, CSR initiatives and
Sustainability corporations need keep themselves aware of the global developments.
One such development is the discouragement and discontinuance of wastages from
the global impact scenario.
Segmentation Variable of the Consumer Market

Geographic
Tapal has divided its operations in to two regions namely:
South Region:
South side looks after the Karachi, Hyderabad and Sukkur.
North Region:
North side includes Multan, Lahore, and Islamabad.
Size of Southern Region
Karachi population size is 19,315,843 till 2010, area 4,227 km² (1,356 sq mi)
Hyderabad population size is 1,847,275.
Sukkur population size is over 1 million 5,165 km² (1,994 sq mi)
Size of Northern Region

Multan population size is 4 million (approx), area is 3,721 km² (1,437 sq mi)

Lahore population size is 8,896,000, area comprises to 1,772 km² (684 sq mi)
Islamabad population size is 805,000 (1998), area 906.0 km² (350 sq mi)
Density of Southern Region
Karachi 3,491.9/km² (9,082.5/sq mi)
Sukkur 175.9 persons/km²/km²
Density of Northern Region
Multan 838/km² (2,170/sq mi)
Lahore 3,660/km² (9,479/sq mi)
Islamabad 880/km² (2,279/sq mi)
Climate
The climate varies as much as the scenery, with cold winters and hots summers in the north
and a mild climate in the south, moderated by the influence of the ocean. The central parts
have extremely hot summers with temperatures rising to 45 °C (113 °F), followed by very
cold winters, often falling below freezing. Officially the highest temperature recorded in
Pakistan is 52.8 °C at Jacobabad. There is very little rainfall ranging from less than
250 millimeters to more than 1,250 millimeters (9.8–49.2 in), mostly bring by the unreliable
south-westerly monsoon winds during the late summer.
Demographics
Age: 20 – 60
Gender: Male and Female both
Family: Cohesion families
Occupation: Labor, Business man, entrepreneurs & self employed, student,
farmer
Religion: Muslims, Hindus and Christians etc
Nationality: Pakistani
Psychographic
Social Class: lower, middle, middle-upper and upper-upper

Life style: Trendy, quality conscious, trying to differentiate themselves
from others, family belongings, Cultural and Heritage values,
Pride, Patriotism
Personality: Elegant, simple, extrovert
Behavioral

Occasions: Ritual, meetings, evening get to gather, Breakfast or any social
meeting
User status: Potential users, non users and hard core users
Usage rate: depend upon need and consumption
Readiness stage: intending to buy
Attitude towards product: Positive attitude
Where customers buy:
Tea is sold through two different places, one is the where customers directly buy the product
from general retailers, USCs/CSDs, Modern Trades and the second is the institution sales
where customers (institutions) directly buy the product from Tapal’s Out of Home Sales
department (OOH) who directly maintains links with different institutions.
When customers buy:

The consumers usually buy Tea at the start of the month in bulk amount for family usage or
when the Tea desire strikes that can suffice them for that particular month or the
commencing one too.
How Customers choose:

Customers choose Tapal through advertising, print ads, promotional schemes & word of
mouth. Since it proudly caters to the different tastes and preferences of people belonging to
diverse lifestyles, Tapal Tea is the primary choice of tea lovers nationwide.
Why they prefer a product:

As tea fulfills a core need of refreshment. Tapal’s brands remains favorite around the
country with its grape-nutty appearance, rich golden color and strong refreshing taste. In
fact its popularity is such that other companies have launched their own versions of these
blends, but Tapal's remains the original and ultimate.
Strategic Canvas - Past & Future

The Strategy Canvas of the Pakistan's Branded Tea Industry 2005-2009
High
Price Premium Quality Extensive Coverage Delivery Time Eff icient ROI Production Capacity Recognized Brands
Low Tapal Unilever Eastern Tea Clover Pakistan Loose Tea
The Strategy Canvas of the Pakistan's Branded Tea Industry 2010-2015

High
Price Premium Quality Extensive Delivery Time Efficient ROI Production Efficient SCM CSR Initiatives
Coverage Capacity
Low Tapal Unilever Eastern Tea Clover Pakistan Loose Tea
Input:
• Exclusive distribution who have extensive market coverage and willing to invest
more in the business would increase the market penetration but the long term
relationship must be maintain with value in return.
• 100% capacity utilization can reduce cost of production and thus offer competitive
price in the market
• Social issues and CSR initiatives can strengthen the company image, customer
preference, brand positioning, attract more investors which would ultimately affect
the business cycle.
• Company owned “Chai Shai Café” would give preemptive mover advantage in this
business.

Cost Structure
%
S.
Contents contributio
No.
n
1 Raw Materials and components consumed 86
2 Direct Labor 1.2
3 Technical director’s remuneration 0.01
4 Salaries, wages and benefits 1.6
5 Employees’ severance cost -
6 Stores consumed 1.7
7 Light, heat and water 0.8
8 Insurance 0.2
9 Rent, rates and taxes 0.05
10 Repair and maintenance 0.3
11 Royalty 4.08
12 Technical assistance 0.7
13 Traveling. Conveyance and entertainment 0.2
14 Postage and telephone 0.07
15 Printing and stationary 0.03
16 Vehicle running 0.03
17 Depreciation 3
18 Canteen 0.17
19 Newspapers, magazines and subscription 0.01
20 Staff training 0.04
21 Intangible assets amortized 0.011
22 Other manufacturing expenses 0.003
Total Manufacturing Cost 100%
• For Tapal Tea, highest value adding component in the total manufacturing cost is
Raw material, i.e. 86% which the company import from Sri Lanka, Kenya and
Bangladesh
• Tapal Tea has reduced it costs, as compared to its competitors, buy changing it Raw
material Supplier source and auction. It purchases “premium quality” Tea from Sri
Lanka, Kenya and Bangladesh. These countries are relatively high annual Tea
producer in the world.
• Cost effectiveness achieved by increased localization.
• Tea Companies are importing Tea fully from Sri Lanka, Kenya and Bangladesh which
in actual increase there costs tremendously as Tax. The end result for them is
increased prices.
Input:
Selection of Supplier on the basis of price competitiveness can reduce the major part of the
production Cost.
• Optimal capacity utilization of plant can reduce expenses

• Implementation of TQM can improve the business infrastructure and lead to cost
leadership in all grounds

Pricing Strategy
• Unilever happens to be the trend and price setter for the whole industry. The other
major player in the industry, i.e. Tapal, Eastern Tea, Clover Pakistan and Loose Tea
its followers.
• These players generally follow the Cost Plus and variable methods for pricing. Fixed
margin 3.36% and 5-8% pass on Distributors and Traders respectively.
• Loose Tea has been smuggling through borders so mushroom players offer high
margins to trade and create tough competition in the market.
Input:
Both Low cost and differentiation strategies can give better pricing options to the
company as well as to the customers to create competitive advantage.
Legging Indicators and Leading Indicators

Leading &
Lagging
Projects/Activitie Impact on Area of Focusing
Indicators
s done Results for tomorrow
[Company is
focusing]
• New brands
for children and
Product youth
• Increase profit and
Introducing new development, Blind • Tea bag
market share
brands Test and pre- markets
research has been • New market
• Diversification
done development
in Core business
• European
Market
• Health
New flavors in Green Product is in testing Increase sales and
conscious people
Tea phase market penetration
• Diet plans
• Children and
youth who are
New variants in Ice Lab test has done
• Taking first mover trendy and want
advantage in the
Tea Powder Flavors have decided social change
category
and tested • Instant
• More revenues
powder/energy
Ready To drinks
• Manufacturing
Cost would be
TIMS unit has optimized
Implementation of established who will • Reduce the
Kaizen and Six sigma
TQM ensure the wastages
implementation
implementation of all • Drop down Time
areas delay in processes
• Environment
friendly company
• Investment to be New machinery
Phase out SBUs
Disposed off Ice Tea utilized in milking would be purchased
having no profitable brands
CAN and Safari PF1 to cater key
profitability • Warehousing demanding brands
Capacity improve

Action Plan
S Pg Strategy & When &
Input Ref Results
# # Action Plan Where
To handle customer
Customer st complains
1 QTR
SWOT 29 Establish Customer Build trust of
1 Complain Strategy Canvas 32 Care Department
2011-2012
customers
Center Karachi
Regenerate the
product strategy
Hiring of new 4th QTR
SWOT Seek efficient and
29 2010-2011 Capture more
2 Distributors in Distributor
26
experience
North market share
North Structure distributors
Region
Business growth
Research new and generate
Diversify Business Scope 09 st
1 QTR 2011
3 SWOT 29
markets and
Nationally
revenues to milk
Business opportunities the other business
units
Establish
Assumptions of
department or Market health
growth 18
R&D outsource the 2011 indicators and
4 SWOT 29
Department Top 7 External 27
consultancy to seek Karachi opportunities
out women cooking identification
Trends
behaviors
New fillers in To capture those
SWOT Market survey 4th QTR
29 customers who are
5 the existing Competition
20
Competition 2010
willing to pay at
product line Growth Matrix Analysis Nationally
different prices
Increase the sales
Visit International volume and
2010-2012
Markets and Tea company good will
Export Market Business Scope 09 Mid East
6 SWOT 29
Exhibitions to seek
European
Increase Sales
exploration out the demand and revenues as
countries
potential investors difference in rate of
exchange
Develop brands for
SWOT rural market with 1st QTR Enjoy the major
11
Rural Market Competition high leverage of 2011-2012 chunk, first mover
7 18
penetration Growth Matrix
29
cost South advantage and
Market Share Round Dust Region leadership
Teabags launch
Introduce new
3rd QTR
SWOT unique variants in
Green Tea 29 2011-2012 First mover
8 Top 7 External
27
Green Tea by
Nationally advantage
variants Trends stretching health
benefits of having it
Build long term Respond the
relationships with th uncertain demand
SWOT 4 QTR
number of suppliers of the market
Tea Suppliers Impact of Issues 29 2011-2012
9 on Strategic 35
to grab the demand
Srilanka
Increase market
relationship of Tea and make share
profile Kenya
difficult to reach for Charge Premium
competitors
10 Pricing SWOT 16 Implement Full 4th QTR Reduce cost of
Strategy Strategy Canvas 29 pricing strategy 2010-2011 manufacturing and
Market Size 27 Nationally enhance margins
Top 7 External 32
Trends
Relative
importance

Factor
Train the Sale force Shelf share will be
Weekly
Availability of and schedule to improved
11 Strategy Canvas 29 2011-2012
Products respond productive
Nationally
Increase sales and
calls on daily basis revenues
Customer Buying
Improve the blend 1st QTR Capture
Tea Aroma Criteria 35
12 of Leaf to enrich the 2011-2012 competition Brands
and Quality Top 7 External 27
aroma Metro Cities share
Trends
Through Research,
multiple blending
Improve 1st QTR
Market Structure tests to improve the
2011-2012 To take out form
Mixture Blend of Industry 10 blend
13 Karachi maturity stage and
and clarify its Competition 20 Work on
[initial sustain growth
Positioning Growth Matrix communication
phase]
platform to
reposition the brand
Distinctive brand
communication to
Brand avoid Build brand
Market Share 2nd QTR
11 cannibalization positioning and
14 Communicati Top 7 External
27 within Tapal brands
2012-2013
specify
on Strategy Trends All Regions
Specific marketing segmentation
mix planning for
each brand
Competition
Growth Matrix 1st QTR Increase CM and
Distributor 20 Implement TQM and 2012-2013 price
Low cost
15 Structure 25 JIT to attain the low Operation & competiveness
Strategy Top 7 External 33 cost leadership Production Increase Consumer
Trends plant value
Cost Structure
Increase firm
Find issue that best goodwill and brand
fit to the business positioning
Choose Cause vision, mission and Market share
3rd QTR
goals. Growth
16 and CSR Strategy Canvas 43
Select CSR
2011-2012
Attract more
initiatives Rural Areas
initiatives that fully financial investors
support the cause and NGOs
and brands Publicizing the
company CSR

SMP Report On Tapal Tea

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Research Report on

Strategic Marketing & Planning

Tapal Tea Private Limited

INSTITUTE OF BUSINESS MANAGEMENT Page 1

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Customer seeking needs would be:

INSTITUTE OF BUSINESS MANAGEMENT Page 9

• Boundaries and Future Scope

Market Structure of Industry

INSTITUTE OF BUSINESS MANAGEMENT Page 10

Eastern Tea Others

Market Structure of the Company

Arm forces and

INSTITUTE OF BUSINESS MANAGEMENT Page 12

USC/CSD Distributors Modern Trades Armed forces &

Market Size - Past four years – Qty (Tons)

INSTITUTE OF BUSINESS MANAGEMENT Page 13

Market Size - Past four years – Value (in ‘000)

INSTITUTE OF BUSINESS MANAGEMENT Page 14

2005-06 2006-07 2007-08 2008-09

INSTITUTE OF BUSINESS MANAGEMENT Page 15

Total Tea Market

60,000 Branded Tea

2005-06 2006-07 2007-08 2008-09

INSTITUTE OF BUSINESS MANAGEMENT Page 16

Market Size - Next four years – Volume (Tons)

INSTITUTE OF BUSINESS MANAGEMENT Page 17

Dust Tea Segment

Leaf Tea Segment

INSTITUTE OF BUSINESS MANAGEMENT Page 18

Green tea Segment

Iced Tea Segment

Product Life Cycle

INSTITUTE OF BUSINESS MANAGEMENT Page 19

Competition Growth matrix

INSTITUTE OF BUSINESS MANAGEMENT Page 20

• Mixture is facing challenges as of being approaching maturity so preemptive action

• Low cost leadership would improve the pricing strategy

INSTITUTE OF BUSINESS MANAGEMENT Page 21

• Tapal Tea Private Limited

Bargaining Power of Buyer

Bargaining Power of Suppliers

Rivalry between Competitors

Threats from Substitutes

INSTITUTE OF BUSINESS MANAGEMENT Page 22

INSTITUTE OF BUSINESS MANAGEMENT Page 23

Company and Competitor Analysis

Competition in an industry is of four kinds

Product Form Competition

Product Category Competition

INSTITUTE OF BUSINESS MANAGEMENT Page 24

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INSTITUTE OF BUSINESS MANAGEMENT Page 26

INSTITUTE OF BUSINESS MANAGEMENT Page 27

Trend Potential Impact We C1 C2 C3

• Since the industry is on the growth as population expansion in Pakistan especially in